The Complex World Of Student Loan Forgiveness

Student loan forgiveness is the ultimate dream for those who can’t afford the tremendous debt associated with getting a college education. In the modern day and age, the national conversation has shifted towards the idea of tuition free college — something that it seems many are more open to than ever.

One thing that the United States has not quite progressed on enough is figuring out a way to forgive the debt that many people, young and old, have looming over their heads. This is particularly striking given the fact that there is an astonishing $1.3 trillion in current outstanding student debt in the U.S. — 10 percent of all household debt.

There are loan forgiveness programs out there, however, but there are many things you’ll need to keep in mind before going that route. As time goes on, the world of student loan forgiveness has seemingly become more complex and risky for the average American with student debt. To top that off, the average amount of debt at graduation has increased from $10,000 in 1993 to $35,000.

The Dangers Of Public Student Loan Forgiveness

Public student loan forgiveness is a program that gives borrowers the chance to pay off the remainder of their federal student loans, as long as you meet a series of strict requirements. Most importantly, you have to have already made 120 payments over 10 years on your loans, and you have to have been working at a qualified public service organization during that decade.

Some of the dangers of public student forgiveness programs include missing payments on your loans, changing employment, not submitting annual paperwork to your loan servicer not submitting paperwork after you’ve made 120 payments on your loans.

There Is Hope For Some

President Obama recently announced a student loan forgiveness program that will relieve an estimated $7.7 billion in student debt for over 400,000 Americans who can’t work because they have a disability.

Scarily enough, over 179,000 of the borrowers who currently qualify for such forgiveness are in default on their loans — and risk having their tax refunds and social security checks garnished to pay off the debt.

“Americans with disabilities have a right to student loan relief,” Undersecretary of Education Ted Mitchell said in a statement. “And we need to make it easier, not harder, for them to receive the benefits they are due.”

It’s A Problem At The State Level

Forgiving student loans is not just a federal problem, it’s also something that officials at the state level have to deal with. Some state leaders have begun to tackle the challenge of forgiving student loans, including New York Governor Andrew Cuomo — who recently announced the ‘Get On Your Feet’ program, which offers up to 24 months of federal debt relief for recent college graduates who live in his state.

“Ensuring students are able pay for college and not saddled with debt is critical for both their individual success and the continued economic growth of New York State,” Cuomo said of the program. “With this program, we are telling recent graduates: if you invest in New York’s future, we will invest in yours.”

Other states, however, have not been so willing to help out. A New Jersey mother made headlines when she received a letter informing her that her son’s murder did not qualify her for forgiveness on his student loans — and that she had to continue paying them back.

“Please accept our condolences on your loss,” the letter to the mother read. “After careful consideration of the information you provided, the authority has determined that your request does not meet the threshold for loan forgiveness. Monthly bill statements will continue to be sent to you.”

What Can You Do?

The best thing that you, as a borrower, can do for the time being is to weigh your options carefully as far as student loan forgiveness programs — but look out for the small print and the dangers that go along with it. There are, thankfully, income-based repayment options that allow you to pay potentially small payments every month, and there are other options available as well.

However you choose to handle your student debt, make sure you’re doing research and staying on top of all the various options out there for you. There might just be a way to relieve yourself of the pressure of student debt without putting yourself at severe financial risk.